Last week, India cleared a proposal for a new chip plant to be developed by HCL Group and Taiwanese electronics giant Foxconn.
The planned facility, with an investment of INR37.06 billion (approx. US$435 million), will come up near the upcoming Jewar airport in the state of Uttar Pradesh and is expected to manufacture up to 36 million display driver chips annually.
Designed to handle a capacity of 20,000 wafers each month, the plant is part of the government's broader push to bolster domestic chip production under the India Semiconductor Mission. It marks the sixth project approved under the program and is expected to begin production in 2027.
This is Foxconn's second attempt at the Indian semiconductor sector. In 2023, Foxconn withdrew from a US$19.5 billion joint venture with Vedanta amid regulatory delays and concerns over ballooning costs.
Project scope
The HCL-Foxconn joint venture will focus on packaging display driver integrated circuits (DDICs) used in smartphones, televisions, automotive displays, and other devices, using wafer-level packaging (WLP) technology — an advanced packaging technique not previously adopted by any of India's OSAT (outsourced semiconductor assembly and test) projects.
"WLP offers significant benefits across multiple metrics," said Danish Faruqui, CEO of Fab Economics, a US-based greenfield fab and OSAT consultancy and semiconductor investment advisory. "At the product level, it delivers advantages in power, performance, area, cost, and time-to-market (PPACt). At the operations level, it enhances process, materials, equipment, and site efficiency."
Faruqui described the project as a pivotal milestone for India's semiconductor packaging ambitions, noting it marks a departure from earlier legacy packaging OSATs approved under the government's semiconductor mission.
"India's first WLP-based OSAT is a key milestone that sets it apart from earlier legacy packaging projects," Faruqui said. "It lays the foundation for India to move toward advanced packaging — a capability essential for future leadership in the semiconductor industry."
However, he flagged concerns about technology sourcing. "It's unclear whether HCL and Foxconn have secured a manufacturing-grade WLP technology license or if internal technology partners are involved," he said. "Neither company currently holds such capabilities."
Faruqui emphasized that advanced packaging is increasingly central to semiconductor competitiveness. "It now determines both product performance and volume scalability. Flagship chips from Nvidia, AMD, and Intel rely on advanced packaging architectures, which are essential for sustaining leadership in today's semiconductor landscape," he said.
Will Foxconn's second coming succeed?
Foxconn's second attempt to enter India's semiconductor ecosystem — this time via a packaging venture with HCL Group — may reflect a more cautious and realistic strategy compared to its earlier foray into chip fabrication.
"This move should be viewed in the context of Foxconn's broader ambitions," said Arun Mampazhy, an independent semiconductor analyst. "Between 2018 and 2023, Foxconn made repeated efforts to evolve beyond electronics manufacturing services into sectors like electric vehicles and semiconductors. But progress in the chipmaking domain has proven elusive."
According to Mampazhy, one key reason for the collapse of the $19.5 billion Vedanta-Foxconn chip fab joint venture in 2023 was Foxconn's limited access to proprietary semiconductor manufacturing technology. "In chip fabrication, technology built over decades is closely guarded and rarely shared," he said. "Foxconn didn't possess - or wasn't able to acquire - the tech it had claimed to bring to the table."
He also noted that Foxconn may have explored potential fab ventures in markets such as Saudi Arabia and Mexico, which lacked existing fabrication capacity and may be open to offering substantial incentives.
"Since 2024, however, Foxconn appears to have scaled back its aggressive push into semiconductor fabrication," Mampazhy said. "This OSAT venture may indicate a shift to a more pragmatic, step-by-step approach — starting on packaging rather than fabs."
Foxconn's partnership with HCL in outsourced semiconductor assembly and testing could signal a strategic recalibration as the company seeks a more grounded entry into the semiconductor value chain.
Toward 3D packaging?
India's entry into wafer-level packaging (WLP) through the HCL-Foxconn OSAT joint venture could lay the foundation for participation in the next generation of chip technologies, including 3D and 2.5D heterogeneous integration, according to Fab Economics.
Faruqui sees the venture as more than just a packaging plant, positioning it as India's potential gateway to advanced semiconductor integration.
Heterogeneous integration, where multiple chips or chiplets are packaged together to enhance performance and reduce power consumption, has become central to leadership products across computing, storage, memory, connectivity, and networking. It underpins key technologies in AI, high-performance computing (HPC), smartphones, autonomous vehicles, defense systems, and data center infrastructure.
However, Faruqui warns that global capacity for advanced packaging remains highly constrained.
"India's planned 20,000 wafer starts per month is a small but important beginning," he said. "But success hinges on demonstrating delivery at scale — and fast."
According to Fab Economics' projections, global unconstrained demand for AI hardware, including data centers, personal devices, and industrial systems, is expected to reach US$520 billion by 2027 and exceed US$1.1 trillion by 2030.
Much of this demand depends on advanced packaging, but it remains unclear how much of it will be captured given current supply limitations.
Talent, IP, and supply chain pose key hurdles
Faruqui noted that talent and intellectual property are key factors determining the success of the HCL-Foxconn joint venture.
"Foxconn has a deep-rooted capability in training and managing large-scale workforces, thanks to its extensive footprint of end-product assembly sites and electronics manufacturing services (EMS)," Faruqui said. "This gives the joint venture strong potential to address the talent challenge in India."
Even in the US, few academic institutions produce graduates equipped for advanced packaging roles, he added. Companies like Intel have had to develop in-house training ecosystems, employing over 10,000 engineers, many with advanced degrees, in packaging R&D hubs in Arizona and Oregon.
On the supply chain front, Foxconn's experience in managing complex supplier ecosystems could provide an advantage.
"Foxconn has deep expertise in procuring and managing hundreds of component suppliers, owing to its vast footprint of end-product assembly sites and electronics manufacturing services (EMS)," Faruqui said. "This gives the joint venture strong potential to address the materials and equipment supply chain challenges."
However, the specific bill of materials and equipment needed for WLP-based DDIC packaging may be provided by a technology partner, though no such partner has been officially named or confirmed in the JV.
Article edited by Jack Wu
